TSX poised for flat start despite rise in oil prices

Stock futures pointed to a flat opening for Canada’s main stock index on Friday, as marijuana producers fell and oil prices gained on supply concerns ahead of a November deadline for U.S. sanctions on Iranian oil.

September futures on the S&P/TSX index were up 1.60 points at 7:30 a.m. ET.

In premarket trading, Tilray Inc. was down 13.3 per cent, while U.S.-listed shares of Cronos Group Inc. were down 9.2 per cent and Canopy Growth Corp. was down 4.8 per cent.

Story continues below advertisement

On Thursday, the Toronto Stock Exchange’s S&P/TSX fell 47.31 points, or 0.29 per cent, to 16,001.71 on Thursday.

U.S. stock index futures edged higher on Friday amid optimism that the United States and China would start new trade talks and as technology stocks rose.

Beijing on Thursday welcomed an invitation from Washington for a fresh round of talks. But the timing of the proposed talks remains unclear, with President Donald Trump saying that the United States was under no pressure to make a deal.

Shares of Apple, which led the market on Thursday, were up 0.3 per cent in premarket trading. The iPhone maker has said a “wide range” of its products could be hit by tariffs.

Other heavyweight stocks such as Microsoft, Alphabet, Facebook and Amazon.com were up between 0.3 per cent and 0.5 per cent.

At 7:33 a.m. ET, Dow e-minis were up 46 points, or 0.18 per cent. S&P 500 e-minis were up 5.5 points, or 0.19 per cent and Nasdaq 100 e-minis were up 28.25 points, or 0.37 per cent.

Story continues below advertisement

Story continues below advertisement

Chip makers, which also rely on Chinese customers for a major chunk of revenue, also rose. Micron and Nvidia were up more than 1.5 per cent and Intel gained 0.5 per cent.

Walmart fell 0.8 per cent after Goldman Sachs raised questions around the retailer’s purchase of a majority stake in India’s Flipkart.

NiSource tumbled 9 per cent after fire investigators suspected the “over-pressurization of a gas main” belonging the utility’s unit, Columbia Gas, caused a series of gas explosions in Boston suburbs.

A bunch of economic data is expected later in the day, with a monthly report on U.S. retail sales due at 8:30 a.m. ET. The Commerce Department is likely to report a 0.4 per cent rise in sales August, from an increase of 0.5 per cent the month before.

The Federal Reserve is set to publish industrial production data at 9:15 a.m. ET, which is expected to have climbed 0.3 per cent in August after a 0.1-per-cent rise in July.

The Fed tends to look at capacity use measures for signals of how much “slack” remains in the economy — how far growth has room to run before it becomes inflationary.

Story continues below advertisement

The University of Michigan U.S. September consumer sentiment index is expected at 10 a.m. ET.

World stocks hit their highest levels in over a week on Friday as expectations grew that the United States and China would open new trade talks, while an interest rate hike in Turkey supported the lira and global risk appetite.

The MSCI All-Country World index, which tracks shares in 47 countries, was up 0.4 per cent on the day by afternoon trade in Europe. It had earlier risen as much as half a per cent on the day, touching its highest since September 4.

Led by technology and auto stocks, the pan-European STOXX 600 index was up 0.2 per cent, set for its best weekly gains in seven weeks.

Tech stocks rose 0.4 per cent after Apple gained on Wall Street following Europe’s close on Thursday. Wall Street was set to open higher on Friday, futures indicated.

Other data showed real estate investment in the country fell in August, raising concern that a cooling property market could increase risks for China’s economic outlook as the trade environment worsens.

China’s benchmark Shanghai Composite index was down 0.2 per cent and the blue-chip CSI300 index rose 0.2 per cent.

Chinese officials welcomed an invitation from U.S. Treasury Secretary Steven Mnuchin to new talks. But President Donald Trump tempered market expectations, tweeting on Thursday that Washington is “under no pressure to make a deal with China” .

The Trump administration is readying a final list of $200 billion worth of Chinese imports that it plans to levy tariffs on in coming days. That move would mark an escalation in the trade war and could significantly slow global growth.

“While the potential for a trade deal in the near-term remains low, a resumption of dialogue could lift sentiment and support markets, in our view,” analysts at Credit Suisse wrote in a note to clients.

On Friday, Chinese Foreign Minister Wang Yi said the current world trade system was not perfect and Beijing supported reforms to it, including to the World Trade Organisation, to make it fairer and more effective.

Uncertainty around the global outlook for trade was highlighted by the European Central Bank, which on Thursday kept policy unchanged as expected and warned that risks from protectionism were growing.

TURKISH RATE HIKE LIFTS LIRA

A sharp interest rate increase by Turkey’s central bank to support a tumbling lira boosted risk appetite in emerging markets. The bank hiked its benchmark interest rate by 625 basis points, to 24 per cent.

Currency crises in both Turkey and Argentina have stoked fears of contagion over the past several weeks, hammering emerging market assets from Indonesia to India to South Africa.

After rising as high as 6.1442 to the dollar, the lira eased to 6.1025 on Friday.

Turkish lira implied volatility gauges fell to their lowest levels in more than a month, as sentiment continued to improve .

“The bold decision (by Turkey’s central bank) reduces the risk that a full-scale financial crisis may unfold,” wrote analysts at Rabobank in a note to clients.

“That said, it’s only the first step and we remain of the view that a rate hike on its own may not prove sufficient to lead to a sustainable recovery in the lira. The central bank’s efforts must be accompanied by an implementation of constructive macro prudential policies by the administration.”

The euro hit a two-week high, extending Thursday’s gains, after comments from ECB President Mario Draghi that focused on healthy domestic fundamentals, including rapid growth in employment and a rise in wages .

The pound reached a six-week high of $1.3139, up 0.3 per cent and set for its second biggest weekly rise of 2018.

Bank of England Governor Mark Carney told ministers Britain’s property market could crash and mortgage rates spiral up if there was a chaotic no-deal Brexit, the Times newspaper reported.

The dollar eased 0.1 per cent against the yen to 111.89 .

U.S. crude was 0.4 per cent higher at $68.82 a barrel as Hurricane Florence approached the U.S. east coast. Brent crude rose 0.1 per cent to $78.23 per barrel.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.

Treat others as you wish to be treated

Criticize ideas, not people

Stay on topic

Avoid the use of toxic and offensive language

Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.